“To the extent that they were relying on Tier Ones, and the Tier Ones were also serving their competitors, it constrained how much differentiation they could put into their products.” The solution, Perry said, was simply for the automakers to work directly and discreetly with Tier Twos.
Such changes in the time-honored supply chain order aren’t necessarily better or worse, but rather, just new and different. Tier Twos say they’re seeing a change in the behavior of engineers, not only at the OEM level, but at the Tier Ones, as well. The old model, where an OEM delivered a request for quotation to the Tier One, and the Tier Two responded to Tier Ones, is being disrupted, and all the players are beginning to understand that.
“The OEM-Tier One-Tier Two structure will continue to exist in some fashion,” Jacobs concluded. “But it’s going to be more a triangle than a straight line.”
Senior technical editor Chuck Murray has been writing about technology for 33 years. He joined Design News in 1987, and has covered electronics, automation, fluid power, and autos.